Tue Oct 16, 2018 9:11am ESTComments Off on Globex volume off the charts, Monday range holds, here is the Tuesday NASDAQ trading plan
NASDAQ futures are coming into Tuesday gap up after an overnight session featuring extreme range and volume. Price worked higher overnight balancing out around the Monday midpoint for several hours before overnight buyers became initiative and worked up near the Monday high. As we approach cash open price is hovering near the Monday high but all overnight trade has been contained within the Monday cash range thus far.
On the economic calendar today we have industrial/manufacturing productions at 9:15am, NAHB housing market index at 10am, a 4- and 8-week T-bill auction at 11:30am, and long-term TIC flows at 4pm.
Yesterday we printed a normal variation up. The day began with a slight gap down and drive lower. The first hour of trade was dynamic and for most of the day we traded inside of it, making it look like we may end up with a normal print. But then, late in the session price pushed range extension up by a few ticks. Late in the session the intra-day gains were erased and we closed near session low. The entire daily range was contained inside of last Friday’s range. Therefore we printed a normal variation up, inside day.
Heading into today my primary expectation is for buyers to gap-and-go higher, close the Friday gap up at 7173.25 then continue higher, trading up to 7200 before two way trade ensues.
Hypo 2 sellers work into the overnight inventory and trade down to 7100. We chop here before rallying back up through overnight high 7153 and continuing higher to close the Friday gap 7173.25 before two way trade ensues.
Hypo 3 sellers work a full gap fill down to 7076.25 then continue lower, down through overnight low 7063.50. Look for buyers down at 6994.50 and two way trade to ensue.
Just wanted to drop a quick note—while Exodus is still in a bullish hybrid oversold cycle, my Sunday research indicates we are likely to see more downside action. Look at the number of industries that had negative money flows last week:
I am still holding a position trade in TQQQ, and will continue to hold it until close-of-business Thursday because I trade my signals. But I think it is going to become a bigger loser than it already is.
That being said, I am in lovely Montecito and cannot be worried by such trivial matters as the stock market. I own a large swath of land high inside the northern ring of safety in that is stocked with plenty of fresh water and high ground.
There are few places on earth you can more vividly see the effects of global warming than southern California. One block from our airbnb, mud came sliding down the mountains one year ago and swept away numerous houses. These coastal towns are being washed away. But even these things I cannot worry about.
The sun is warm, the palomas are cold, and there is a pool calling my name.
Exodus members, the 204th edition of Strategy Session is live. Go check it out!
As for the rest of you, I will be back at MotherShip, nestled at my trading desk hidden down alongside the wastelands of Detroit come Tuesday. Morning trading reports will resume at that time.
Tue Oct 9, 2018 8:53am ESTComments Off on NASDAQ comes into Tuesday gap down in range, here is the morning trading plan
NASDAQ futures are coming into Tuesday gap down after an overnight session featuring extreme range and volume. Price worked lower overnight, trading down but catching a responsive bid ahead of the lower quadrant of Monday’s cash range. As we approach cash open price is hovering at Monday’s midpoint.
On the economic calendar today we have 3- and 6-month T-bills up for auction at 11:30am and 4- and 52-week bills at 1pm.
Yesterday we printed a normal variation down. The day began with a gap down and two-way auction on the open. Buyers drove shortly after, closing the overnight gap but stalling right at it before the first hour of trade was in [initial balance]. Then, after looking like the market was catching a bid at the daily mid, sellers instead stepped in and initiated a fresh leg lower pressing up range extension down and trading deep into the August second conviction buy day. By early afternoon the market had made a low with a quality look. We then spent the rest of the day rallying higher, eventually closing up above the daily midpoint.
Normal variation down.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7392.50. From here we continue higher, up through overnight high 7398.50. Look for some chop at the 7400 century mark before buyers continue higher to 7439.75 and two way trade ensues.
Hypo 2 buyers close overnight gap 7392.50, take out overnight high 7398.50 then stall out at 7400 before two way trade ensues.
Hypo 3 sellers work down through overnight low 7337 and begin working back down to Monday low 7286.50. They test below the Monday low setting up a move to target 7251.25 before two way trade ensues.
Mon Oct 8, 2018 8:50am ESTComments Off on Extreme overnight action, week two Q4 coming in hot
NASDAQ futures are coming into Monday gap down after an overnight session featuring extreme range and volume. Price was in balance overnight, chopping along the Friday midpoint for much of the Globex session before making a downward rotation around 4am. Since then price has bounced back up to the low-end of that overnight balance.
There are no economic events today. Federal workers have today off in celebration of Christopher Columbus.
Last week markets were gap up into Monday then essentially marked time through end of Wednesday, with the days starting strong and ending weak. Then Thursday saw a gap down and away from that three day range then a drive lower. The drive lower continued through Friday until a responsive bid stepped in late Friday afternoon. The last week performance of each major index is shown below:
On Friday the NASDAQ printed a normal variation down. It was an aggressive normal variation down but I am not labeling it a trend day or even a double distribution trend day. However it was more dynamic then our usual normal variation down. But the VPOC settled just below the daily midpoint. The day began flat and with a wide open auction that eventually gave way to sellers who worked down through the Thursday low then accelerated to the downside. Price below through the 7400 century mark by lunchtime and continued lower through the early afternoon. Late into the afternoon, after probing into price levels untouched since late August, a responsive bid stepped in and ramped price back to the daily midpoint by end of day.
Heading into today my primary expectation is for sellers to gap-and-go lower, trading down through overnight low 7387 to set up a move to test below Friday’s low 7347. Look for buyers down at 7321.25 and two way trade to ensue.
Hypo 2 buyers work into the overnight inventory and close the gap up to 7436.25. Buyers continue higher, up through overnight high 7453.25. Look for sellers up at 7475.50 and two way trade to ensue.
Hypo 3 stronger sellers drive down through 7321.25 and tag the 7300 century mark. We chop here for a bit then continue lower, down to 7251.75 before two way trade ensues.
Sun Oct 7, 2018 2:21pm ESTComments Off on Fourth quarter, week two: time for the bull to step in and buy
Last week was about punishing the people too lazy to do research who just allocate capital on the first day of the quarter, every quarter, like a wind up doll that is cranked by sales people. It was also full of distraction and noise. Unless you tuned out politics and kept your inputs simple and raw. Like a vegan who only eats food locally sourced, but brain food. The indexmodel relies on raw data and generated a bearish call last week. That was all we needed to mint coin during week one of the fourth quarter. You are only as good as your last trade I suppose. If that is the case, my cock and beard are both strong coming into week two. There are several reasons to be bullish heading into week two.
The PHLX semiconductor index and NASDAQ transportation index both have charts that, technically speaking, look bullish. Allow me to state that I do not prefer technical analysis, but it merits our attention because sometimes it works. Most of the time it is just fodder to appease the minds of trigger happy degenerates who are addicted to gambling. But if you keep it simple and buy at old resistance and sell at old support, and also use the charts to determine if a market is trending [discovering] or not, then it can be useful. These charts are both simple and bullish:
Next we have Exodus flagging hybrid oversold. I only mention this on public blog because Senor Tropicana, as he’s known in South America, already let the cat out of the proverbial bag last week. This bullish cycle began at close of business Thursday, October 4th and will run clean through to close of business Thursday, October 18th.
Why else am I bullish? Why else…well, I think people are in general good and sapiens continue to be the most successful species on earth. Sapiens and cockroaches. While evil has and will continue to manifest itself in different forms, like the industrial meat complex or dimwitted news folk like Charles Gasparino, the powers of good will always prevail. Sometimes it seems like we are past the point of no return, but then new hope flickers in a small corner of the world and begins to grow into an almighty light, like Elon Musk.
For the reasons stated above I am bullish going into the second week of the fourth quarter. This means I will only be working the long side of the market inside the NASDAQ 100 futures arena and pressing a position trade via TQQQ that I initiated late Friday afternoon as part of my ‘two-point conversion’ play after scoring a huge touch town last week. I actually made my quarterly income goal last week. I suppose the bar was set too low. In any case, overconfidence is the biggest risk to my plan, I will need to do some proactive exercises to manage it—like go outside and dig a hole or have a women tie me to a table and beat me or something.
Winter is coming. There were some interesting behavioral quirks last week that suggest people are preparing to hunker down and play it safe. Maybe the way the Fed removed of a few bits of accommodating language from their last statement, or their the continued campaign of slowly lifting borrowing rates has been enough to calm down the animal spirits that have taken to buying over-sized houses and self-destructing artwork. It always amuses me how quickly people can forget about the hard times when the good times return.
Stay grounded. What we need is a good recession but it doesn’t seem likely. Not with semiconductors leading our current expansion. Unless you’re a bond company stooge, we have a full work week ahead of us. Let’s take it one day at a time and if the bulls run we will too.
Exodus members, the 203rd edition of Strategy Session is live. Go check it out for a less colorful look at what we expect to see this week!
Sun Oct 7, 2018 1:16pm ESTComments Off on Fake a move, make a move: the bullish setup in semiconductors
Semiconductors have been an integral component to the secular bull market. I would argue they are leading the whole move. I did a long-form blog about my thesis at the end of 2017. I’ll save you a click, this is the main hypothesis of my belief:
One of our firmly held investment beliefs is that we are at the beginning of an era of economic prosperity the likes of which nearly every living human has never seen. A revisiting of the roaring ’20s, but this time the driver is automation. Soon our daily lives will be augmented in a big way by AI. Listen, we are a point where computer power goes parabolic according to the rules established by Moore’s law.
Last week during the Exodus Strategy Session the PHLX semiconductor index grabbed my interest because it has been coiling up and building energy pretty much all year and we had nearly reached the apex. I wrote the following note:
Semiconductors continue to form a coil. More and more I expect the first move away from this compression to be a false start before a real move happens in the opposite direction. Long term trend is bullish.
Fake a move, make a move. The overplay for the underlay. Whatever you want to call it. Everyone watches these coils and everyone thinks the breakout from them is a great trade. I think it is a shit trade. I prefer to fade it because markets spend the majority of their time in balance.
Well, here we are. Sellers attempted a move down-and-out of the coil:
This chart should be on every serious traders screen this week. My primary hypothesis is we have a bullish setup on semiconductors heading into the second week of Q4. Secondary hypo is this downside accelerates and takes the whole market down with it.
Plllllllace your bets.
Or don’t. I don’t really care.
Alright, I am diving back into my Sunday research.
Fri Oct 5, 2018 9:10am ESTComments Off on Payroll data mixed/missed growth expectations, NASDAQ coming into support cluster, day after trend day rules apply, here is the Friday morning trading plan
NASDAQ futures are coming into Friday gap down after an overnight session featuring extreme range and volume. Price balanced overnight, chopping along the lower quadrant of Thursday’s trend down. As we approach cash open, price is hovering in the lower quadrant still and yet to breach the Thursday low. At 8:30am Non-farm payroll data came out mixed, with change in non-farm134k vs 185k payrolls coming in well below expectations [134k vs 185k est].
Also on the economic calendar today we have consumer credit at 3pm.
Yesterday we printed a trend down. The day began with a gap down and drive lower. Price opened just below weekly low and drove down, uncontested, until discovering a responsive bid at the 09/13 open gap. Price managed to ramp a bit into the closing bell.
Heading into today my primary expectation is for buyers to work into the overnight inventory and close the gap up to 7513. Then sellers step in and work price down through overnight low 7469.75. Look for buyers down at 7450 and two way trade to ensue.
Hypo 2 gap-and-go lower, sustain trade below 7450 setting up a move to target 7408.50 before two way trade ensues.
Hypo 3 stronger buyers close overnight gap 7513 then work up through overnight high 7540 setting up a move to target 7556 before two way trade ensues.
NASDAQ futures are coming into Thursday gap down after an overnight session featuring extreme range and volume. Price worked lower overnight, trading down into prices unseen since last Wednesday. As we approach cash open prices are hovering below the weekly low. At 8:30am initial/continuing jobless claims came out better than expected.
(good news, neutral reaction, bearish)
Also on the economic calendar today we have factory/durable goods orders at 10am.
Yesterday we printed a normal variation down. The day began with a gap up inside range. Buyers made a small push off the open but were unable to test beyond the Tuesday high. They also stalled out before the market could go range extension up. Then responsive sellers stepped in. The pushed RE down then we came into balance. Then later in the session they closed the overnight gap and we ended the day near session low.
Heading into today my primary expectation is for sellers to gap-and-go lower, trading down through overnight low 7602.25 setting up a move to close the gap down at 7590.50 before two way trade ensues.
Hypo 2 stronger sellers trade us down to 7573.25 before two way trade ensues. Stretch target is 7573.25.
Hypo 3 buyers work into the overnight inventory to close the overnight gap up to 7665.50 then continue higher, up through overnight high 7667.50 before two way trade ensues.
Tue Oct 2, 2018 8:45am ESTComments Off on Powell at noon, here is the Tuesday morning NASDAQ trading plan
NASDAQ futures are coming into Tuesday gap down after an overnight session featuring extreme range on elevated volume. Price worked lower overnight, trading near last Friday’s low before catching a bid and coming into balance. As we approach cash open price is hovering just barely inside of Monday’s low.
On the economic calendar today we have a 4-week T-bill auction at 11:30am. Then at 12pm Jerome Powell is talking in Boston at the NABE conference.
Yesterday we printed a normal variation down. The day began with a gap up-and-out of the prior week’s range. Price drove higher off the open, briefly making a new record high before the auction stalled out. Buyers were unable to press the market range extension up despite an hour-or-so spent hovering just below the high. Instead responsive sellers stepped in and pushed. They continued pushing until we went RE down, then closed the overnight gap, then continued lower, finally discovering responsive buyers just ahead of Friday’s naked volume point of control and experiencing a small ramp into the bell.
Heading into today my primary expectation is for sellers to reject us out of the Monday range, driving lower off the open to take out overnight low 7630.25. This sets up a move down to 7613.50 before two way trade ensues.
Hypo 2 stronger sellers trade us down to the open gap at 7590.50 before two way trade ensues.
Hypo 3 buyers work into the overnight inventory and close the gap up to 7674 then continue higher, up through overnight high 7678.25. Look for sellers up at 7676.75 and two way trade to ensue.
NASDAQ futures are coming into Monday gap up after an overnight session featuring elevated range and volume. Price worked higher overnight, trading up near the record high print before settling into balance. As we approach cash open price is hovering well above last week’s high and about 25 point away from record highs.
The move overnight is being attributed (at least partially) to NAFTA coming to a new agreement amid the ongoing trade wars.
On the economic agenda today we have ISM manufacturing/employment at 10am followed by a 3- and 6-month T-bill auction at 11:30am.
Last week started off with selling across all major indices. While the NASDAQ found a floor by late Monday and rallied through the rest of the week, the other indices marked time and worked sideways. The last week performance of each major index is shown below:
On Friday the NASDAQ printed a normal variation up. The day began with a gap down and two way auction. Buyers eventually became initiative and closed the overnight gap and took out overnight high by a few ticks before we traded back to the daily mean. There was a small ramp into the closing bell. Ultimately it was an inside day.
Heading into today my primary expectation is for sellers to work into the overnight inventory and take out overnight low 7670.50 then continue lower to close the gap down to 7663.75. Look for buyers here and two way trade to ensues.
Hypo 2 gap and go higher, trade up through overnight high 7719.75 and probe the globex high 7726. Open air. Look for sellers up at the weekly ATR band high 7754.25 and two way trade to ensue.
Hypo 3 stronger sellers trade down to 7644 before two way trade ensues.